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CBD office leasing history suggests 30% of all tenants move, but rising construction costs may change that

  • ​With approximately six million square feet of large tenant leases set to expire before 2021, history suggests that landlords with large blocks available have a shot at landing 30 percent of all the available square footage, for a total of 1.8 million square feet of relocating tenants across the CBD.
  • While pending expirations suggest cause for optimism despite the 26 new full-floor availabilities that have been announced since April, one looming factor may continue to dampen prospects for landlords looking to land new tenants: construction costs. With record volumes of ground-up construction underway and significant demand for fit-out construction from tenants new to the market, construction costs continue to climb, making it difficult for some tenants to justify the expense of relocating without achieving some other type of occupancy cost savings.
  • With the dog days of summer nearly behind us, fourth quarter market activity will demonstrate whether this market cycle still has legs or if tenants can expect increasing leverage in negotiations come the new year. ​​

Source: JLL Research

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